Taiwan shakes off recession following 10-month slump

By Amy Su / Staff reporter, with CNA

Sat, Oct 27, 2012 - Page 13

The nation’s economy may gradually be shaking off sluggish sentiment, as a government designed composite monitoring index turned from “blue” to “yellow-blue” last month, the Council for Economic Planning and Development (CEPD) said yesterday.

A blue light, which had been seen for the last 10 months, indicates recession.

However, Council for Economic Planning and Development Minister Yiin Chii-ming (尹啟銘) remained cautious about the economy in the near future amid uncertainties over the European debt crisis and slowing growth in global emerging economies.

Last month’s economic rating climbed to 22 points from 15 the previous month on the composite monitoring index, the council said.

The index has a scale between nine and 45, with the lowest range — nine to 16 — represented by a “blue” indicator, and the second-lowest range — shown by a “yellow-blue” indicator — standing between 17 and 22 implying a slowdown.

“Although the indicators last month exhibited quite an improvement, we still need to be cautious over the near future,” Yiin told a media briefing.

Yiin said the eurozone debt crisis has not been resolved, with momentum on global emerging economies not showing a significant rebound, both raising uncertainty over the global economy.

Hung Jui-bin (洪瑞彬), director-general of the council’s economic research department, also expressed concerns.

Citing data from the Ministry of Economic Affairs, Hung said exports for the first two weeks of this month showed a substantial drop compared with a year ago.

“I really hope last month’s improvement will not be a flash in the pan,” Hung said at a press conference.

The index of leading indicators, which is used to gauge the short-term economic outlook, increased 0.1 percent from a month earlier to 130.9 points, the council’s report said.

However, the index’s annualized six-month rate of change — which provides a more accurate forecast of the short-term business cycle — decreased 0.4 percentage points to 3.2 percent last month from the previous month, marking the fifth month of consecutive decline.

Hung said the results show that signs of economic recovery remained weak, with public confidence still low.

Externally, the latest figures on the leading indicators of the Organisation for Economic Cooperation and Development and five Asian countries — China, India, Indonesia, Japan and South Korea — showed a declining trend for the fifth and the 20th months in a row respectively, providing more evidence that declining global demand may still be a hidden trouble for Taiwan’s economy in the near future, the council said.